The SchifferLine
Timely Real Estate News………………………….1 June 2022
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Existing home sales down 2.4% in April
If youâre reading the latest economic news, it is not surprising that existing home sales are down â inventory is lightening up some, prices remain high, interest rates up.
The National Association of Realtors reported existing home sales were down for a third straight month, slipping slightly in April. Month-over-month sales were split amongst the four major U.S. regions, with two areas posting gains and the other two experiencing waning sales in April. Year-over-year sales struggled, as each of the four regions reported dips. Existing-home sales in the West dipped 5.8% compared to the previous month, registering an annual rate of 1,140,000 in April, down 8.1% from one year ago. The median price in the West was $523,000, up 4.3% from April 2021.
Total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, slid 2.4% from March to a seasonally adjusted annual rate of 5.61 million in April. Year-over-year, sales dropped 5.9% (5.96 million in April 2021).
“Higher home prices and sharply higher mortgage rates have reduced buyer activity,” said Lawrence Yun, NAR’s chief economist. “It looks like more declines are imminent in the upcoming months, and we’ll likely return to the pre-pandemic home sales activity after the remarkable surge over the past two years.â
Total housing inventory at the end of April amounted to 1,030,000 units, up 10.8% from March and down 10.4% from one year ago (1.15 million). Unsold inventory sits at a 2.2-month supply at the current sales pace, up from 1.9 months in March and down from 2.3 months in April 2021.
“Housing supply has started to improve, albeit at an extremely sluggish pace,” said Yun. He also noted the rare state of the current marketplace.
“The market is quite unusual as sales are coming down, but listed homes are still selling swiftly, and home prices are much higher than a year ago,” said Yun.
“Moreover, an increasing number of buyers with short tenure expectations could opt for 5-year adjustable-rate mortgages, thereby assuring fixed payments over five years because of the rate reset,” he added. “The cash buyers, not impacted by mortgage rate changes, remain elevated.”
We are also seeing more buyers going for fixed rate loans rather than the adjustable they have in recent years.
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New home sales plunge 1.7% in April
Sales of new, single-family houses in the U.S. dropped 1.7% — more than expected last month to the lowest level in two years as rising construction costs, home prices, interest rates and supply chain woes continue to batter the industry.
The U.S. Census Bureauâs latest data shows the pace of new home sales fell by 16.6% in April from the month before at a seasonally adjusted rate of 591,000. Analysts surveyed by Refinitiv anticipated a dip of 1.7%.
The drop is 26.9% lower than a year ago, and the lowest since April 2020. This is the
fourth straight month new home sales have declined.
The Census Bureau reported that the median sales price of new homes hit $450,600 last month. With interest rates now upward of 5.8%, the rising cost of homeownership is pricing more would-be buyers out of the market.
“One year ago, 25% of new home sales were priced below $300,000,” explained Odeta Kushi, deputy chief economist at First American. “In April of this year, only 10% of new home sales were priced below $300,000.”
Inventory of new homes was also up last month, according to government data. “New home months’ supply jumped to 9 months, up from 6.9 months in March and the highest since 2010,” Kushi noted, predicting, “Builders will likely slow construction in the months ahead.”
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Housing demand surges in pricey suburbs
New residential sales data shows that the most popular housing markets of 2022 are the top 10 pricey suburbs just outside a major city. Among the pandemicâs prevailing housing market trends has been a surge in demand in the suburbs, as urban dwellers reevaluate their needs amid a rise in remote work.
These markets include, Woodinville, Washington; Highlands Ranch, Colorado; Westchase, Florida; Yorba Linda, California, Johnâs Creek, George; and Tustin, California.
The most popular markets so far this year paint a picture of how remote work has changed the U.S. housing landscape. Demand for suburban homes found an extra gear last summer, perhaps as buyers gained more clarity in their employersâ return-to-office policies.
Research suggests the rise of remote work is responsible for roughly half of home-price growth during the pandemic. How many employers continue to allow this flexibility for employees to live where they choose will go a long way toward determining which markets are most in demand in the future.
The report also found that home prices were increasing in all 10 markets at a faster rate than their nearest major city, underscoring the lasting popularity of suburban markets amid the pandemic.
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NARâs economist views 2022 with cautionâŠ.
Two years after enduring the devastating financial impacts of COVID-19, the U.S. economy has made an impressive comeback, in large part due to a booming housing market. NAR Chief Economist Lawrence Yun noted there are significant questions regarding the sector’s direction over the coming months. According to Yun, housing kept the economy afloat as home prices rose and buyer demand intensified during the Pandemic.
âHowever, this year has already thrown some curveballs, including record-low inventory and unyielding inflation.â Yun says inflation will persist and in turn cause strain for would-be buyers. Additionally, other external economic factors will negatively impact the market, both indirectly and directly, he said.
âThe Russia-Ukraine war and escalating fuel prices have contributed to further housing unaffordability for buyers.â And Yun explained that a more immediate impact for home seekers has been the rapid increase of mortgage rates, along with other anti-inflationary actions from the Federal Reserve.
âMortgages now compared to just a few months ago are costing more money for home buyers,â he said. âFor a median-priced home, the price difference is $300 to $400 more per month, which is a hefty toll for a working family.â
NAR calculates purchasing a home is now 55% more expensive than a year ago. These rising mortgage rates and prices hurt affordability, and although wages are improving, Yun says they are âwiped awayâ due to inflation.
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Bidding wars for apartmentsâŠ.and no refrigerator?
This is happening all over Southern California. The availability of apartments in Los Angeles and surrounding counties is so tight that some renters are paying above list price to secure a high-quality unit, while others jostle for the remaining stock of apartments. And many are coming with no refrigerators.
As a result, renters are scrambling to âget in lineâ for rentals and it is not uncommon to find multiple offers now going to premium rentals â condos or single-family homes. LA County rents are up 16% from a year ago, when the rental market was still subdued by people who moved in with family or moved inland for more space â as remote working demands increased across the Southland.
The Los Angeles Times recently covered another phenomenon â rental units, which once included refrigerators, are now renting âwithoutâ. This is forcing renters to scramble on Craigâs List, Facebook Marketplace, and the newly created Underground Fridge economy to find the appliance. Lucky renters with extra cash opt out of the used refrigerators and go to Best Buy or Home Depot and get a new one delivered. The Times reported that the National Multifamily Housing council that California has more apartments without refrigerators than any other state in the union.
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Los Angelesâ glorious architectural history
We have covered several other prominent architectural gems in The Schiffer Line before, and today, we are sharing with you other renown attractions that have earned their place as part of our area’s amazing cultural history.
Lummis House, Highland Park
Built and named after its namesake, Charles Lummis, a passionate convert to the life and culture of Southern California, as is truly one of its most fabulous founding characters. The Lummis House is located in Highland Park, which he built of boulders dragged up from the Arroyo Seco, the sometimes-waterway of which Teddy Roosevelt told Angelenos: âThis arroyo would make one of the greatest parks in the world.â
Naturally, we turned it into the Pasadena Freeway according to a recent Los Angeles Times articleâŠand thatâs true. Lummis was the City Librarian and insisted all Angelenos read about our history.
Skirball Cultural Center, Sepulveda Pass
Like the Getty, it sits atop a hill above the Sepulveda Pass and has its own exit sign on the 405. It is a meeting and exhibit space describing itself as âguided by the Jewish tradition of welcoming the stranger and inspired by the American democratic ideals of freedom and equality.â
Jack H. Skirball may have been the worldâs only rabbi, developer, and philanthropist. He spent nine years as a rabbi but moonlighted as a film salesman and wound up producing nearly 60, most of them short subjects but two of them Hitchcockâs.
Norton Simon Museum, Pasadena
Even if you havenât visited this museum, most likely youâve seen it. It stands near the âstarting lineâ of the New Yearâs Day Tournament of Roses Parade on Colorado Blvd.
Founded as Pasadenaâs art museum, it was facing ruin in 1974 when it agreed to Norton Simon taking it over, paying its bills and installing his own enormous and top-notch collection there.
Simonâs wife, Oscar-winning actress Jennifer Jones, oversaw the museumâs renovation and collection, and an LA Times art critic called Simon the âmercurial Medici of Los Angeles art
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Water water â no where to be seen & fires
As we approach summer, I donât know about you, but it makes me so very sad that we find ourselves in the position of making choices about cutting down to watering our gardens two or perhaps even one day a week, and the potential loss of our plant materials. We all need to pitch in and do our part to conserver as much water as we can.
Also, about two weeks ago in the course of 3 days, we had 5 brush fires in the Sepulveda Pass going north between the entrance to Bel Air Crest and the north bound on ramp to the 405. It is heart breaking to see the damage.
If you see someone smoking in the Canyon and they toss their cigarette out the windows, honk your horn and ask them to put it out in their car and not on the street or roads.
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What is happening in my world?
I recently had cataract surgery in both of my eyes. When I shared that I was going to undergo this procedure, so many said, âOh Yeaâ , I had it and it is so easy, and it is amazing how much difference it makes. They were 1000% correct! I did not realize how bad my eyes had gotten, and my doctors said I really could have waited… so very glad I didnât.
I know there are some comments about the slowing down of the market, but honestly, I do not see it. In our weekly sales meetings when transactions are being discussed, the numbers simply have not changed, nor am I seeing any difference in my business nor that of my colleagues. As I have talked about in the past, I have a great number of buyers, and if I had the inventory to sell to them, they would be thrilled! The majority of these buyers are obviously impacted by the increase in interest rates, so their purchase numbers are a âlittle harderâ, but they all still want to buy a new home. I repeat my quest and search, so if you are at all thinking about making a move, or know someone who is, please give me a call⊠310-442-1384
I hope you all had a wonderful Memorial Day Holiday weekend.
Talk to you soon
Carole: 310 442-1384
Carole Schiffer, Realtor Coldwell-Banker Residential Brokerage/Brentwood Office 310-442-1384 (office) or e-mail me at carole@caroleschiffer.com www.caroleschiffer.com
CalBRE 00677619
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